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Nikkei bags FT for digital strategy, expansion of global readers

Japan's biggest financial news publisher has surprised the media world by bagging the Financial Times and doing so at quite a premium to recent newspaper deals.

PHOTO: REUTERS

[LONDON] Japan's biggest financial news publisher has surprised the media world by bagging the Financial Times and doing so at quite a premium to recent newspaper deals. Now what?

Nikkei, whose flagship Nihon Keizai Shimbun is Japan's leading business daily, is paying US$1.3 billion to Pearson to buy the FT Group, which owns the salmon-hued paper with an editorial team of roughly 500 journalists in more than 50 locations around the world.

It's quite a trophy, and it complements Nikkei's strengths at home. Every morning on the packed subways of Tokyo, people are seen scrolling through the Japanese-language daily on their smartphones and iPads. Yet analysts say what the Japanese publisher is really buying is global influence and strategic smarts to build out its own emerging digital strategy.

"Nikkei has a huge staff - it's sprawling - but they are mostly focused on news for the Japan audience," said Ken Doctor, a media analyst for Newsonomics. "Those reporting resources could go into Korea, Hong Kong, Singapore and maybe China." The privately held Japanese media conglomerate publishes the country's leading business daily with more than 3 million print and digital subscribers. The Nikkei has about 430,000 digital subscribers.

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The two companies have similar businesses that until now have been on opposite sides of the globe. Both newspapers focus on finance and business, and both companies have stock market indexes prominent in their home territory.

Nikkei says it will use the FT to become more global and boost its digital growth. The FT has been one of the most successful newspapers in building a website that charges for content, building to more than 500,000 digital subscribers.

Both news organizations could combine their editorial resources to further expand in other markets in Asia and the Nikkei could benefit from using the digital capabilities of the FT to boost advertising and subscription revenue, Doctor said. The FT has about three dozen people in data science who crunch numbers to optimize pricing and work with advertisers to get the most from their spending, he said.

"Nikkei is the Japanese FT," said Charlie Beckett, director of media at the London School of Economics. "It does give them (Nikkei) an organization that has been a hugely successful digital adapter." Nikkei, founded in 1876, generated 300.6 billion yen (S$3.32 billion) in revenue last year, more than quadruple the FT Group's sales. The Japanese media company's operating profit was more than triple the FT's 24 million pounds, though the latter is an adjusted figure.